One Company, Two CRM Strategies

The Schwan Food Company has distinct customer groups, each with their own buying patterns and preferences. Thus, eschewing one monolithic CRM program the frozen food company has created distinct CRM strategies to best serve each of those segments. Chances are that any pizza consumer has been a customer of The Schwan Food Company at one time or another. Based in Marshall, MN, the city in which Schwan was founded more than 50 years ago, it sells some of the biggest names in frozen food, including pizza lines Red Baron, Tony's, and Freschetta. It sells everything from appetizers to desserts--most of it packaged, frozen food. Schwan boasts being the world's top egg roll maker, and runs the biggest pizza plant on Earth. The company has well over 20,000 employees conducting business in nearly 60 countries, and has a delivery fleet 6,500 trucks strong. Not surprisingly it has a substantial share of both the home delivery and institutional food-service markets. The two divisions that serve those markets, Schwan's Home Service and Schwan's Food Service Group, have revamped their CRM strategies as part of Schwan's ongoing effort to keep customers satisfied and loyal. The industrial service group has renewed its commitment to communicating with the entire customer value chain, rather than just with distributors. The home delivery group has expanded its analytics and marketing efforts, while offering new fulfillment options for the first time in its storied history. Hot From the Oven Like its Home Service brethren, Schwan's Food Service Group wants to improve customer relations. But with a strikingly different customer base--schools, convenience stores, concessions, and other direct food servers--Schwan's institutional sales division needed its own CRM strategy. Schwan's Food Service Group started evolving its customer outreach strategies in 2000, when management approved a CRM action plan. The unit needed better access to and understanding of distributor and institutional data, and to improve its communication to the decision-makers at those customer sites. Ultimately the group decided to build on the SAP R3 platform already in-house, and added mySAP capabilities for CRM, primarily focusing on campaign management and communication. "At the time we weren't considering a [specific] software package," says Aaron Alsaker, business systems manager at Schwan's Food Service. "We had certain requirements and [SAP was] able to fill them. We proved the concept of everything we did before we implemented any software solution." Chief among those requirements was the ability to establish a deeper, name-brand relationship with its distributors' customers. "We wanted to extend the reach of our distributors and our own internal sales force," Alsaker says. Schwan's is already a heavy hitter in the primary and secondary education markets--Alsaker says the company provides more than half of all the school pizza in the country. But the company is unwilling to rely on entrenchment, instead seeking to broaden the ways customers think about doing business with Schwan's. "We are trying to get operator pull-through," Alsaker says. "We want the school to ask the distributor, 'Do you have this latest product from Schwan?' so the distributor is taking the order and making sure they are getting the product." Sending the company's dozens of sales representatives to hundreds of thousands of schools was not an option, and Schwan's Food Service wanted a mass-market approach that would include a closely tracked response component. "We started talking about integrated marketing," Alsaker says. "Instead of going through magazine ads and point-of-sale, we wanted to go through email, call people, and use direct mail pieces of different varieties to extend our sales message." Schwan's started out by targeting customers based on industry segment, and sending information and offers on products that seemed suited to their classification. The initial marketing emails, begun in 2002, were originally managed by hand. Schwan's has since realized cost savings and efficiency gains by automating the email process and moving many sales contacts from dedicated account managers to the call center the Schwan Food Company already had in place. "It gave [us] broader distribution and the cost-per-sale was a lot less," Alsaker says. This year Schwan's implemented a more automated customer interaction center program, which ties in email and outbound telesales contacts and results, and manages a marketing calendar. Outbound calling effectiveness has been vastly improved now that agents are reporting campaign delivery and customer results directly into a CRM database. "With the previous system, we exchanged numerous Excel files of customer data between our system and our call center's system," says Nick Schwarz, e-marketing manager. "We expect to see an increase in the volume and accuracy of customer data, as well as being able to better target our customer lists." In addition to increasing customer contact frequency and directness, the Food Service division improved the usefulness of its Web site. Some changes, such as a tool to find a nearby distributor, are obvious gains. Other changes are very specific to the education market and offer a unique tactical advantage to doing business with Schwan's. For example, the site offers a portal tool that provides automated reporting of commodity allotment credits. So, when a school contracts to sell Schwan's pizza, that school can cash in a government-assigned cheese quota and receive a rebate check from Schwan's. "It provides us with information on what the end consumer is buying, and the school can go [online] and check their own balance," Alsaker says. The Food Service unit currently juggles multiple monthly email campaigns, including regular product updates and an information-heavy quarterly newsletter. Schwarz characterizes the analytical methods and results as a work in progress, but says revenue attributable to the email campaigns is "better than expected." Sales contact and opportunity management is still transitioning from an ACT!-based proof-of-concept system to SAP's mobile sales software, a changeover that will occur sometime in 2004. "By piloting with ACT! first, [we have] been able to cost-effectively work out many kinks, instill discipline, and build system requirements for future initiatives," says Lil Schroeder, vice president of operations for Schwan's Food Service. The cautious approach to sales automation is typical of Schwan's approach to technology--do what works, and do it when it works for the business, without straining to cross a finish line before a competitor. "We're getting ROI a small amount at a time," Alsaker says. "It requires a lot of patience by management to say that we're not going to get there overnight. It may take many years, but eventually we're going to get there and keep focusing on it." David Voss, senior solution consultant at SAP, applauds the measured approach that Alsaker and his team have taken for both CRM strategy and technology. "They were set up to be innovative and take this channel and see how they could make it work, so the Internet marketing was a newer group that didn't have many barriers. They're very much encouraged to test the limits of software and people, and learn from that and move forward," he says. "There was never a sense of a fear of failure there, which is awesome." In fact, Voss was mildly concerned during training that everything looked a little too easy. "We said, 'You can't leave the room until everyone can make a campaign,'" Voss says. "The problem later was that we had 15 people who had done a campaign in 45 minutes, and it gave them an expectation that when they went out in the field they could [always] create campaigns in 45 minutes." But rather than get ahead of itself Schwan's continues to improve its time-tested business model, with an explicit attitude that standing still is never an option. "The customer had always been at the center of the universe, as long as they took it on the route at their location," Home Service's Bader says. By broadening the definitions of who customers are and engaging in more meaningful, less rigidly scheduled conversations with them, the Schwan Food Company hopes to keep doorbells ringing and school pizzas slinging, with no expiration date in sight. Delivering in Style Just as it did in 1952, Schwan's Home Service business model relies heavily on the individual salesmanship of the route drivers. The majority of sales are made right on the doorstep. So while a driver may stock his truck according to the known tastes of his route as recorded on a handheld computer, or may suggest a new product to clients he suspects will have an interest, Schwan's does not segment home delivery customer data on a purchase-by-purchase basis. In fact, there is something of an undercurrent of pride in the largely traditional approach to selling. "We do not rely on others for information about our products and our customers," says Glenn Bader, director of Internet and advanced technology for Schwan's Home Service. "We don't need to, as we know their names, their children's names, their pets' names, and their addresses, since we home-deliver the food." That's not to say Schwan's is technophobic or uninterested in evolution. The company equipped its field force with handheld computers in the 1980s, and has worked to improve the flow of changes to customer data between drivers and the call center. Based on their sales history, Schwan's delivery route managers stock their trucks with an assortment of up to 300 products and take to the streets on a biweekly cycle, so regular customers generally have a chance to make a purchase every two weeks. But the company wanted to have meaningful contact with customers outside the time of purchase, without losing the flavor of the personal transaction. So, Schwan's overhauled its home-delivery Web site. "In January 2001 we began using E.piphany for campaign management and analytics. This was with version 2.0 of schwans.com, which launched in December 2000," Bader says. "We launched Web personalization in January 2002. This added personalization in four areas of the site. We launched version 3.0 in April 2003 with personalization deeply integrated into the experience." Using personalization tools from E.piphany, the company can make offers sensitive to a customer's buying history, but at a time convenient to the customer, rather than to the route driver. Customers have responded, and as of the end of 2002, roughly one seventh of home-delivery sales can be traced to the Web site. Bader credits personalization with a nearly one-third increase in online shopping cart conversions as well. Orders placed online benefit route drivers, who know they will sell those items, and customers, who are no longer at the mercy of other clients who may send their favorite products out of stock before the truck reaches their house. Web-based sales are a part of Schwan's Home Service long-term sales strategy. The division had experimented with various telesales options in the past that always fell flat. With online ordering "you see the food," Bader says. "The Internet allows us to put [ordering] at the customer's fingertips." Part of the overall CRM effort has involved reallocating Schwan's existing resources with a greater focus on meeting customer needs. In some markets with overlapping delivery resources, customers can schedule flexible delivery dates rather than taking the slot dictated by a single driver. The company now also offers postal delivery of some items, which can be sent as gifts or promotions, expanding the potential percentage of customers' total food-buying budgets. "For us it's about customer retention, but the mail-order business allows us to expand into a different use of our products," Bader says. Schwan's Home Service also runs email marketing campaigns, both embedded in service-date reminders and at the discretion of Bader and his staff, who can segment and analyze the response rates easily by tracking online replies and sales response. Customer feedback now flows from the site directly to the truck, as queries or service concerns are downloaded to the depot and eventually to the driver's handheld. Internet communications and analytical capabilities through the data collected in E.piphany and modeled both in that suite's tools and in SAS have allowed Schwan's to expand the capabilities of its Blue Medallion program, created for high-value clients. The company is now better able to suggest periodic recognition gifts, and the offers presented and accepted can be tracked through email and reported to the route driver. This improves the view of the customer both in the back office and at the point of sale. These improvements have led to Schwan's Home Service more than doubling online sales, improving Web conversions 30 percent through personalization, and cutting the time it takes to create marketing campaigns from months to days. This CRM success is based on knowing what customers want and when they want it, and making the flow of information as convenient and enjoyable as possible for all involved. ROI at Home Through its improved CRM efforts Schwan's Home Service boosted customer satisfaction and more. It:

more than doubled online sales;

improved Web conversions 30 percent through personalization;

cut marketing campaign--creation time from months to days;

integrated customer data collection with other divisions to one database. ROI on the Road Schwan's Food Service expects over 100 percent return on investment above costs on its CRM efforts. It also:

projects 15 percent new sales growth in 2004;

projects at least 5 percent improvement in cart-to-close ratio;

integrates its customer data collection to one database with other company divisions. Jason Compton is a freelance journalist based in Evanston, IL